Fenergo Client Lifecycle Management provides a truly streamlined, digital client orchestration solution to enable the delivery of a quick and efficient client onboarding process for both new and existing clients.

Why Digitalization is the way forward for Private Banking & Wealth Management

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Why Digitalization is the way forward for Private Banking & Wealth Management

Why Digitalization is the way forward for Private Banking & Wealth Management

February 2019

Steve D'SouzaGlobal Head of Private Banking and Wealth Management

Head of Private Banking and Wealth Management, Steve D'Souza, explains how High Net Worth Clients (HNWC) no longer have to endure extensive, face-to-face client onboarding meetings. Digitalizing client onboarding for HNWC streamlines the process effectively and efficiently, ensuring a positive client experience with no stress and in less time.

High net worth (HNW) clients that utilize the services of a private bank have traditionally been given a bespoke, personal experience associated with luxury brands, namely their own dedicated investment advisor, personalized products and services and a reliance on face-to-face appointments to suit their schedules.

This high caliber of service commences with the onboarding process. After the Relationship Manager has completed their assessments with the client, the next step involves the tedious work of opening the account. This generally includes multiple requests for documentation, AML (Anti-Money Laundering) and KYC (Know-Your-Customer) due diligence and identity verification, which currently tends to be manually validated by an expensive back-office labor force.

Current estimates however indicate that by the end of 2020, fifty percent of the entire global workforce will fall within the 'Millennial' threshold, and as such, a new breed of private banking clients are forming. There is also a Baby Boomer inheritance mountain which means that in the next few years there will be a shift of assets to the next generation. This changing landscape in client demographics will have a significant effect in the digital transformation of this sector. Private banks and wealth management firms must utilize digital as channel to ensure that the needs of new and existing clients are met. It should be noted that this overhaul in the way private banking clients are served must span the entire client lifecycle.

By embracing the technical capabilities of what digital innovation can offer, those from within the private banking arena have a rare opportunity to win on both fronts. In other words, by transitioning regulatory and compliance workflows from manual to digital, not only could institutions reduce costs, improve efficiency levels and drastically minimize time-to-revenue, but private banking clients will be accustomed to a significantly more positive end-to-end customer experience.

According to a 2018 Accenture report, more than half of HNW clients over the age of 40 declared they would leave their private bank if an integrated and seamless channel is not provided. Clients are seeking hybrid advice and multiple solutions to communicate with their bank. Ultimately, by introducing increased process automation and client self-service channels, private banking and wealth management firms can instead inject resources into more profitable tasks and expedite client onboarding.

Digital Transformation: Commencement to Completion

I believe that the digital experience must begin at the very start of the client journey. Whilst retail and commercial banks are at the forefront of ever-increasing regulatory burdens, private banking and wealth management firms that onboard HNWCs are required to comply with even higher levels of stringent regulatory demands. As a result, private banking clients are required to go through a long, repetitive and hugely inefficient onboarding process resulting in a long and somewhat arduous customer experience. You only get one chance to make a first impression, therefore the client onboarding process is essentially a shop window - reflecting what the ongoing customer experience will be like from the private bank or wealth manager.

Whilst there is no 'One Size Fits All' onboarding structure, it does include the request of countless documents that must be submitted in-person. In fact, according to Fenergo research, it is estimated that new clients are contacted up to ten times and can be asked for up to one hundred individual types of documentation. Once the back-end team have received the required documentation, they then manually scan, examine and cross-reference the information against other sources.

Should institutions look to outsource this manual workflow externally, it then comes with its own risks. In effect, whilst firms can outsource document validation and identity verification tasks to other companies, accountability ultimately remains with the primary institution. To add even more complication, the recent introduction of the European Union’s General Data Protection Regulation (GDPR) has made outsourcing even more of challenge.

Also, private banking and wealth management clients bear the brunt of tightened regulatory demands with respect to sanctions, politically exposed persons (PEPs) and beneficial ownership transparency, resulting in more documents, further delays and ultimately, an even more unfavorable customer experience.

What does a Digital Client Onboarding Solution Entail?

On the face of it, the solution is simple – a significant transition to a digital onboarding process that extends to the entire lifecycle of the private banking client – both new and old. The provision of multiple documents uploaded remotely via a secure online portal, subsequently removing the need for face-to-face appointments. The interaction with the client happens at the appropriate time in the process and only requesting the required data.

As a result, the middle and back office are not required to engage in the monotonous process of manually inputting scanned documents into internal document systems, not least because of the highly advanced capabilities of Machine Learning, Optical Character Recognition (OCR) and Natural Language Processing (NLP) technologies.

These technologies, while nascent, enable private banks and wealth management firms to accurately extract text from scanned image-centric documents. Extracted text can then be cross-referenced against other data sources, both internally and externally.

Using innovative technologies, such as robotics process automation (RPA), and the Fenergo Rules Engine, which incorporate the jurisdictional rules for the country, the client data can be categorized automatically.

This is hugely beneficial for assigning compliance validation tasks linked to AML, KYC, MiFID and FATCA regulations, among many others.

Further down the onboarding workflow process, the technology is also able to perform key risk ratings without the need to manually check every specificity. In the review process, RPA can flag up high-risk findings where potential PEP or sanction related threats develop subsequently, passing the alert on to a highly trained compliance officer.

A Digital Onboarding Transition Benefit Client and Institution

Whilst the outlined potential of digital transformation constitutes just a very small selection of the overall range of possibilities, they illustrate a singular pertinent point. By allowing modern, innovative and highly automated technologies to reduce the regulatory and compliance burdens of the onboarding process, private banks and wealth management firms can significantly reduce time-to-revenue, reduce costs, improve efficiency levels and allow institutions to instead focus on more profit-driven tasks. This will also increase client retention.

However, the ultimate benefit is to the client. The reward of a robust digital onboarding solution for private banking and wealth management is HNW clients will encounter a holistic and frictionless customer experience, with less intrusion on their valuable time.